Balance same as settlement figure

SarahWoodcock

I've just paid off 4 loans early and saved myself a lot of money as, obviously the settlement figures were much lower than what I would have paid if I'd let the loans run.  These latter figures were also the balances.  Bamboo however have told me, with 26 payments left to run, the settlement figure and balance is the same.  How can this be as front-loading interest has been illegal for years?  They just keep telling me they comply with FCA guidelines.  I tried to contact the FCA but general questions like this don't seem to come under their remit and the Ombudsman will take forever and I'll have to start a formal complaint.  Does anyone know where I can go for a definitive answer as to whether what Bamboo is doing is legal and/or ethical?

silvercar

Could it be in their T&Cs that settling early means paying the remaining monthly repayments?

SarahWoodcock

I'm not sure.  The man actually said on the phone "the interest is added at the start" and when I said that was made illegal years ago he just said he could assure me they complied fully with FCA guidelines.  Very odd.

Nebulous2

Can you give some figures, loan, apr, period and settlement figure? 

Some lenders add up the total cost of the loan including repayments and give that as a balance. When you settle they will discount from that. 

Others give the capital outstanding as the balance, then add on interest and take off repayments every month. You don't get a discount for early settlement there, in fact you could be charged slightly more than the balance with an extra two months interest. 

Both methods get you to the same place. Paying off early saves you money. They just take different routes to get there....

Nearlyold

As Nebulous2 says "Balance" can mean two different things depending on which way the lender chooses to present the figures.

Was the "Balance" on the Bamboo loan (prior to your request for an early surrender)  the same as the total of the payments yet to be made or a lower figure?

MorningcoffeeIV

A settlement figure will normally be slightly higher than your balance, as it will be current balance plus two months interest.

However, Bamboo don't charge early settlement, hence why your settlement figure is the same as your balance and not higher.

SarahWoodcock

Well it's £137.02 per month with an interest rate of 59.7% and there's 26 payments left (out of 60) so if it runs full term, I'll pay £3,562.52.  The settlement figure I've been given is £3,561.54, saving 98p!

MorningcoffeeIV

What was the capital?

Nearlyold

Was that settlement figure given over the phone or is it in an official in writing Early Settlement Quotation sent by post or email?

SarahWoodcock

The original loan was £3,113.  The figure was given over the phone but I queried that as the other loan companies had to send it to me in a password-protected email.  The man on the phone was adamant it was correct even though, when I log in, it says the balance on screen but you have to phone for a settlement figure.  It's so frustrating as I just want to get rid of it!

MorningcoffeeIV

In that case, they gave you the wrong figure.

Contact them again.